Matthieu Rouif: The Story of PhotoRoom, Is This YC’s Most Capital Efficient Company? | E1074

1. 0:00 – 0:21

   Intro

   1. MRMatthieu Rouif0:00

      Mobile software is 10X bigger than anything you'll do on desktop. We are addressing, like, five billion people. My kids, the first app they use is photography. They use PhotoRoom, you know, it's like one of the first software you use in your life is photo editing, and probably the last one you'll use too. If you want to, like, be the number one, though, you have to embrace that.

   2. HSHarry Stebbings0:15

      (Music) Matt, I am so excited for this. What people don't understand is, like for me, when I have

2. 0:21 – 5:47

   Founding and Recognition

   1. HSHarry Stebbings0:21

      founders of products that I love, it's like 10 times more exciting. So first, thank you so much for coming on the show today.

   2. MRMatthieu Rouif0:27

      Thanks, Harry.

   3. HSHarry Stebbings0:28

      Now, I would love to start... We see PhotoRoom today. What was the aha moment for you that like, "I'm gonna dedicate many years (laughs) of my life to creating this product?"

   4. MRMatthieu Rouif0:37

      Well, first, I've been working on photo video apps for the past 15 years. Like I- I started that on campus at Stanford during my master. So it's been a long, long journey. That's how... why I got an iPhone development was photography in the first place. The aha moment for PhotoRoom is I was at GoPro, that has acquired, uh, the startup I was working at as a head of product. And, well, we were doing an iPhone app quick for video editing. We're being featured by Apple. And I don't know if you know these things, but they ask you like, "Can you provide the artwork for tomorrow or yesterday?" Like very fast. (laughs) And while we were this small startup being acquired, but the US where they were sleeping, our designer was off, and tell myself, "Well, I'm good with Photoshop. I'm good with computers. Let's do it." And I opened my computer, and well, I ended up spending the afternoon literally like trying to get what I wanted. I had a clear vision in mind, and it just didn't work, like too many options. I didn't manage to do something I wanted. It was frustrating, and I... And at the same time, I had, like on the other part of the office, I had the ITM, and I knew they were working algorithm. They were so helpful, and it kind of clicked for me, like, "Okay, we need something easier. It needs to get easier." Programming got easier, but editing didn't. And let's build something. There's an opportunity here.

   5. HSHarry Stebbings1:52

      It's amazing how long it took for the world though to see (laughs) the opportunity.

   6. MRMatthieu Rouif1:56

      (laughs)

   7. HSHarry Stebbings1:56

      Do you know what I mean? I do have to ask, you know, I have this strong investing, I get in trouble for this from the team, but I really don't like investing in first-time founders. I just feel there's so many mistakes that you make (laughs) when it's your first time. Uh, this is your third time.

   8. MRMatthieu Rouif2:12

      Yeah.

   9. HSHarry Stebbings2:12

      What are the big fuck-ups that you made with the first two that you've done differently this time?

   10. MRMatthieu Rouif2:17

       So I, I started two companies and joined a third startup that was acquired. So it's kind of my fourth startup story. I think first one is focus. So really, then my second startup, like we were doing too many things. We tried to do two products. We were not focused. And one thing that worked amazingly well for our, for our PhotoRoom is, with Elliot, we just, like from the beginning, every six months, we would focus more. So we started with video and photo, and they say like, say, "Okay, let's just do photo." And then we started to say, "Okay, let's focus on people selling online." And every time we focus, we 10X the number of people, like signing in, being happy, being like very engaged with the product. So I think this one was very, yeah, very helpful.

   11. HSHarry Stebbings3:00

       Can I, can I just... Sorry, we'll go to number two. I just have to ask on that one. Okay, agree. But the challenge is like when do you then need to expand again? Because, you know, as we think about moving into enterprise or moving to desktop or moving back to video or moving away from pure, you know, sellers on marketplace or whatever that is, how do we think about when's the right time to expand again?

   12. MRMatthieu Rouif3:20

       I mean, when it works, you get product market fit, you can... and you, you feel the traction, you feel the pull. So I don't think you should expand or like being, be wider as long as you don't see, sense the pull for that. You might want to piv- pivot, pivot a bit, like focus on something different if it doesn't work. I mean, as long as you don't have product market fit, you shouldn't expand anything. And so, for instance, we just focused on the iPhone app in the beginning and really create an amazing experience for these users.

   13. HSHarry Stebbings3:46

       So we have intense focus, number one. What else would we do differently?

   14. MRMatthieu Rouif3:50

       Starting companies, like especially for curious people, you learn like it's an acceleration of learnings. You get like, you ship faster, so every time you ship, you learn. And well, I think after like 15, 12, I mean, 12 to, to 15 years in the field, like you know it by heart, like you're an expert. So I know like mobile apps, I know photo apps. Uh, it's the third time I wanted to start subscription, third company, you know. (laughs) So all these things, like you go so much faster in the beginning. So there's just, yeah, just this experience that you learn from that.

   15. HSHarry Stebbings4:17

       Can I ask, do you think the speed of execution is as important as everyone says?

   16. MRMatthieu Rouif4:21

       Yeah, definitely. I get... Actually it's... So we have three culture values at, at PhotoRoom, one of them is like instant learning, and literally, like speed of execution, like ship, learn, iterate is one of them. Like, you know, you have a, like finite time in life, anything like life wh- where... like a career path in a, in a company, and the number of things you can learn really depends on how many loops you can get in that. And I really want, like everyone working with us to like think about it, like how can you learn faster from what you do, from what you ship? So for us, it's critical. I, I think Elliot, my co-founder, is like... he's an amazing developer, but he's like the fastest builder I have ever met. Like he ships so fast, it's amazing.

   17. HSHarry Stebbings5:00

       Can I ask, how do you think about l- like instilling learning as a process? And what I mean by that is I find a lot of people like move fast, move fast, move fast, and they don't actually spend the time t- to analyze what went right or what went wrong and learn from it. How do you think about learning from the moving fast?

   18. MRMatthieu Rouif5:16

       There is no point in shipping fast if j- ship, like... Well, usually you don't ship like really good quality product if you ship fast. So you have to know what you're trying to learn, and that's how you reduce and you condense what you want to ship. Like what's... We always say like, "What's the V0 of what you want and what do you want to learn from that?" And I think it's a great learning, like before shipping, try to know what you want to learn from, otherwise, well, you manipulate the result to say like you've learned something. It's better to like start from a hypothesis and validate it.

   19. HSHarry Stebbings5:41

       Do you know I spoke to a mutual friend of ours before the show, Jacob at RevenueCat.

   20. MRMatthieu Rouif5:46

       (laughs) Nice.

3. 5:47 – 13:21

   Product and User Interaction

   1. HSHarry Stebbings5:47

      And I said, "What, what should I ask Matthieu?" And he said, "Ask him about the McDonald's test." And I was like, "Right, can you, can you help me understand that?" And he said, "No, you're gonna have to ask him."

   2. MRMatthieu Rouif5:59

      (laughs)

   3. HSHarry Stebbings5:59

      (laughs) And so I'm like, "Okay, what- what's the McDonald's test?"

   4. MRMatthieu Rouif6:04

      ... in the early days, and we still do it, like in the street, uh, we would go with Elliot, and we would go to McDonald and literally we would go in the line and offer people, like, willing, ordering things, ordering food, like, "Can we pay for it?" And you just test Photoroom. And we would run like, yeah, 10 questions about photography and then we would, like, let them try the onboarding and really give us feedback. And every time they wouldn't get to the new feature we were trying to do. Like, it was a new feedback, we discovered something and it was the best learning experience. It actually comes from the, uh, Zenly team, they were doing that in Paris.

   5. HSHarry Stebbings6:37

      (gasps) .

   6. MRMatthieu Rouif6:37

      I did it so much that I, I got banned from the McDonald from next to our office, so it's-

   7. HSHarry Stebbings6:42

      (laughs) .

   8. MRMatthieu Rouif6:42

      ... just, like, I couldn't enter it any more. Like, the security guard would come to me and say, "You can't, you can't," him, like, (laughs) "You can't go in because you, you are bothering our customers."

   9. HSHarry Stebbings6:51

      I'm sorry. I'm naive here. What questions are you asking when you sit down with them?

   10. MRMatthieu Rouif6:55

       Two things. First, you want to understand, like, how they approach your, your vertical. So far, it's great. Everyone does photo and it's a big asset. And so I would ask, like, "What, what, how do you capture your photo? Which app do you use? Like, what do you use them for? Are you using them for fun, for selling, for other stuff?" And give you like a, kind of an insight, people get comfortable. While it's really show, don't tell. Like, you show them the app, they download the app and, well, it's very difficult because you get frustrated because you know where they want, you want them to tap, but, uh, all the value of it is, like, them telling you how they feel, what they, what do they understand from the app, what, uh, they wish was happening now and really, understanding what's, uh, it's user testing. Like, really understanding what's the process for them when they see that as a first experience.

   11. HSHarry Stebbings7:40

       When do you listen to customers versus when do you go, "Great, but we actually have a product roadmap that we're gonna execute against"?

   12. MRMatthieu Rouif7:47

       Yeah. For first, I think you get a lot of insight from what they expect. To give you an idea, like, we ask people to take a selfie, like, to show them how the app is working, and, like, one of the user testing we realize, well, some people, if you ask them to take a selfie, first they think it's to create an account with, with you, so they're going to spend, like, actually minutes (laughs) like longer, a lot of time, in the onboarding finding the right picture for them because they want to look good, maybe it's a social network, maybe something like this. I would have never guessed that, like, uh, if you don't s- I mean, if I hadn't seen it, like, someone doing it. Well, in the early days, it's also about the blockers, like, what people understand, what people see, like, what, what they understand from the product itself. So what we would do with Elliot is really, well, going back to the office, like, changing the feature a bit, changing the wording and getting back to McDonald and testing it again. Like, uh, you shouldn't wait longer than, like, uh, one hour to test again. Yeah, that's, uh, (laughs) that's how you iterate fast and learn faster.

   13. HSHarry Stebbings8:39

       Can I ask you, and, uh, I'm gonna apologize for being direct in this interview, but I'm gonna apologize once and then just be direct. Some would say, like, ah, it's like, it's like background removal as a service, like, cool, but, like, it's a feature. How do you advise found- and I'm sure you've been told that, respectfully (laughs) .

   14. MRMatthieu Rouif8:56

       (laughs)

   15. HSHarry Stebbings8:56

       How do you advise founders who are told that it's a feature and not a product?

   16. MRMatthieu Rouif9:01

       Yeah. I think it happens to a lot of entrepreneurs-

   17. HSHarry Stebbings9:02

       Yeah.

   18. MRMatthieu Rouif9:02

       ... so it's (laughs) a great question. What's important is you, I mean, to see the depth in the feature, and I think you become, like, a product and not a feature the moment you understand, like, this feature is, is giving depth to what you can do. And to give you an example, like, okay, you can say background removal, well, it's, like, a feature, like, you do white background. Well, first, it's useful for some use cases, but, like, being in the industry for, like, 10 years before that, I knew, well, yes, but it's not only that. Like, first, as a, like, a, a product, you can remove background, but you can also blur, you can, like, focus on what's important, you can do templates, YouTube thumbnail, like, uh, it's, like, actually it opens up a lot of opportunities for other features you can build on top of that. So I think seeing this depth that, you know, product that's coming from it is really important.

   19. HSHarry Stebbings9:51

       Do you think every product starts as a feature and, like, over time and usage, it becomes a product?

   20. MRMatthieu Rouif9:56

       Features that are, like, minimal, lovable product that you execute extremely well are the beginning of a lot of, like, uh, of successful products. And so, uh, I do believe, like, focusing and making people extremely happy with what you do is more important than being very wide when you approach something new.

   21. HSHarry Stebbings10:15

       Now, I spoke to many of your investors and, you know, got many thoughts back in terms of what we should talk about. The first, um, (laughs) which we chatted about before this, was capital efficiency. So you scaled to 20 million in ARR with two million of cash.

   22. MRMatthieu Rouif10:28

       Yeah.

   23. HSHarry Stebbings10:29

       (laughs) I've never had that before. I've had the opposite. (laughs)

   24. MRMatthieu Rouif10:33

       (laughs) .

   25. HSHarry Stebbings10:34

       Uh, very often, and that's The Capital Efficient Company, um, by way of venture. But, like, when you reflect on that journey, 20 million ARR, two million cash, how did you do this, do you think, so efficiently? When you look back, what are your lessons from that efficient scaling?

   26. MRMatthieu Rouif10:49

       I mean, I see capital as a mean, like, it's a tool and you can deploy it. But, uh, we never saw, like, uh, we never come, came from, with the idea of, like, "Okay, let's be ass-, like, uh, not spend money and let's, like, we reinvest, like, everything we can in the, in the growth." Uh-

   27. HSHarry Stebbings11:03

       So it wasn't conscious, "Let's save money, let's be super lean and save money"?

   28. MRMatthieu Rouif11:07

       I think we like the idea of being lean and, like, but we always pay for the best tools, like, so we're not lean on, like, uh, the best tool for the team. I think we really like to hire, like, individual contributor and that's part of our culture, but that's, I mean, it's an externality that you're lean on that part. We just want to move fast, and we know, like, small team move faster. I think that's one, uh, one of the reason why we are very efficient. And then there is, um, thinking, like, macro, I think there is the app store story, which is a big part of it. Like, so Apple and Google, they're, like, the App Store on mobile, they're giving you distribution. Yes, they take, like, a, a cut of it, but basically it means they offer, like, a worldwide distribution to five billion people and you, you don't need, like, a big marketing sales team to do that. So it's very capital efficient. Like, a very small team, product team can go a very long way. In terms of capital efficiency, like, one of the secret of mobile apps is people are willing to pay up front. And so, I mean, you, you have a payback of one month, so you don't need that much capital on the ad side. ... I mean, you have our, uh, we, we, I wouldn't give the exact numbers on that but like, uh, you can see like, uh, how much, like people pay on a yearly subscription and you just get the money back in, in, uh, in, uh, one month.

   29. HSHarry Stebbings12:21

       Got you. Okay. And so people back, uh, uh, uh, tell me what I can and can't ask. How many people pay monthly versus annually?

   30. MRMatthieu Rouif12:28

       If you want to be e- efficient, and you want to be able to scale, like fast, like, uh, like us, I think jumping on the yearly by default is the best option. And it's actually how you create, like, or c- also, like, retain users. So most of people, like, uh, going on yearly is a really good way to scale.
4. 13:21 – 21:04

   Hiring and Culture

   1. MRMatthieu Rouif13:21

      uh, "We should have bought that like, uh, earlier."

   2. HSHarry Stebbings13:24

      Yeah. When you look back on those early days, is there anything that you wish you'd done that you hadn't done?

   3. MRMatthieu Rouif13:29

      We hired great people, so you need to try. Like you can't be like 100% (laughs) l- you, you don't get the right person 100% of the time, but for sure like-

   4. HSHarry Stebbings13:35

      Do you agree with hire fast, fire fast?

   5. MRMatthieu Rouif13:38

      One thing we do is we work a lot with freelancers and that's like great way because they have so many opportunities, so they're willing to like try. And we, we say we're a team of entrepreneurs serving like entrepreneurs. This is our main audience. So it goes re- great with our culture. We give them a lot of freedom, and a, and, uh, and autonomy. But you need, you need to know like really fast. You, you should be able to know in a one, uh, few month like if it's the right person or not. So-

   6. HSHarry Stebbings13:59

      How do you know whether to hire a freelancer or full-time?

   7. MRMatthieu Rouif14:02

      For us, like if the person is, uh, like willing to, I think you learn a lot from working one week together. We love this model. People come to the office. They... It's actually less risk for them, like because the culture is such an important part, like when you're going to put like few years of your life-

   8. HSHarry Stebbings14:15

      Ah, I get it. Okay. So there's essentially you hire them as a freelancer first. They come for one or two months, see how it is, and then it's like, "Hey, this is-"

   9. MRMatthieu Rouif14:21

      Yeah, a few weeks, uh, even, like, uh, yeah.

   10. HSHarry Stebbings14:23

       You know in a couple of days up front.

   11. MRMatthieu Rouif14:24

       Yeah. And they ask for, I mean, uh, usually people are super happy to do that. Like they, they love to try and to like, they have s- so much demon and they, they don't want to commit like to a job and sometimes they have, uh, already like their status. They are, they might be working with other companies at the same time. So, eh, we are very successful working with, uh, freelancer. Although a big part of the team has been freelancing at some point. I've been freelancing, uh, you know.

   12. HSHarry Stebbings14:46

       Still are. (laughs)

   13. MRMatthieu Rouif14:47

       (laughs) There you are.

   14. HSHarry Stebbings14:47

       (laughs) As if I'm y- we're al- we're always unemployed. (laughs)

   15. MRMatthieu Rouif14:51

       Yeah. We do it- yeah. (laughs)

   16. HSHarry Stebbings14:51

       I always joke with my family that I'm unemployed. That's why I have my own thing. (laughs)

   17. MRMatthieu Rouif14:54

       (laughs) I'm putting myself out of my job all the time.

   18. HSHarry Stebbings14:56

       Um.

   19. MRMatthieu Rouif14:56

       That's just your thing.

   20. HSHarry Stebbings14:57

       No. I, I, I love that. So yes. I, I like that. Freelancers as well, like as you said, in terms of testing the culture, I think that's so important. Have you always had good culture?

   21. MRMatthieu Rouif15:05

       We spent a lot of time. I remember sitting with Elliot, like working even for our first hire, like thinking what, what are going to be the three pillar of our culture? What matters to us? I think we did the process quite, quite early on indeed.

   22. HSHarry Stebbings15:19

       What were the other two pillars?

   23. MRMatthieu Rouif15:21

       Well-

   24. HSHarry Stebbings15:21

       You mentioned the first about the shipping, iterating, and then-

   25. MRMatthieu Rouif15:24

       Yeah. The first one is, um, challenge toward progress, kind of, you know, candid feedback. Like i- if there is, like you should be able to challenge anything in the company if you think it's not going great or even like if, even if it's not your field. Second one is instant learning. So really this idea of shipping and learning from that and how like really, we're all learners. And the last part is be, be an artisan. We are all makers, and we really love, like people that master their craft and are s- yeah, of making or crafting, and are the best at their, their craft, sharing it, th- sharing that part with others, learning from others. So yeah, be an artisan. And that's the name of the entity in France, so...

   26. HSHarry Stebbings16:03

       (laughs) So when we look at the scaling, as we said, 2 million in, 20 million of AR. At some point around there, I believe one of your investors said there was kind of a plateau in the growth. What happened with the plateau? Like why does that happen?

   27. MRMatthieu Rouif16:17

       First, yeah. Exceptional growth. Uh, actually, I think YC say like, we were one of the... They never saw a co- company growing that fast, like with this mu- much capital, so this, this low capital. So indeed, it's quite uncommon. Growth happens with, with like, uh, uh, it's a step function, you know. So you, you kind of unlock new things, and you just need to be patient and talk a lot to p- to your user, like getting back to talking to them, understanding what are their pain points and exploring that.

   28. HSHarry Stebbings16:43

       Is it challenging when you have a slight plateau? (laughs) As you said, you can't always be growing up and to the right, like continuously, and so the step functions. Is it challenging with team morale when you have a growth plateau?

   29. MRMatthieu Rouif16:54

       We're very, like focused and driven by growth. So you kind of, kind of like that's a... I think people don't improve something they don't look at, like m- numbers they don't look at. So we, we, like we talk about growth every week. And so people are happier when there is growth, so you have to be careful with that. But like, the company is growing amazing well, uh, amazingly well. We're profitable. So it's just like, take a step back. And that's, and understand what are the kind of adjacent needs of your user and go even deeper with that. I mean, it happens all the time. So you don't want to hire people that are here just for growth. You want to hire people that are here for the, the mission you're solving.

   30. HSHarry Stebbings17:28

       W- you said about kind of the focus on metrics there, and, you know, metrics move when you pay attention to them. What defines a, like successful user to you? When you think about the metrics that you focus on, what, what are they?
5. 21:04 – 23:04

   App Functionality and Strategy

   1. MRMatthieu Rouif21:04

      it just, like, doubled down on our growth, uh, in the... And it was the PhotoRoom watermark. So if you go on any marketplace you'll see PhotoRoom watermark on a lot of listing, and that, that, like, got the, the viral growth.

   2. HSHarry Stebbings21:14

      Can I ask a weird one? Do you want people to remove the watermark? Because it's great advertising for you.

   3. MRMatthieu Rouif21:21

      Uh-

   4. HSHarry Stebbings21:21

      But you also want them to pay. And so it's-

   5. MRMatthieu Rouif21:23

      Right. In mobile subscription, like, you always have, like... There's always 10X at least more people that are going, you know, always people that are n- never going to pay for it, and there are always, like, at least 10X more people that are going to be on the free plan. So the numbers, like, it makes sense. And actually, we have a lot of people that do screenshot, they do screenshot of the, of the image in the editor, and just, like, remove the watermark this way. And we actually measure it. It's big. But, uh, I think it's, I mean, it's fine. Like you, you, people are using the product. If they use it a lot, at some point they'll pay.

   6. HSHarry Stebbings21:52

      Is there a way to prevent that?

   7. MRMatthieu Rouif21:53

      You know, at some point, you're happy with people. Uh, yeah, it's a mass, uh, scale audience. Uh, I think you can find ways to go around that, the hacking. But I mean, it's, I mean, the history of, of software is kind of famous for Photoshop, like people hacking Photoshop, so we kind of live with it, and it's not like, "Focus on growth and focusing, focus on delivering value rather than, like, blocking people." It's a, it's a growth mindset, you know.

   8. HSHarry Stebbings22:15

      You know, I remember, like, 2006 or whatever it was with, like, Nick Lasting, the music streaming Kazaa.

   9. MRMatthieu Rouif22:22

      Yeah.

   10. HSHarry Stebbings22:22

       Wasn't it? It's like people will always steal digital products. (laughs)

   11. MRMatthieu Rouif22:25

       Yes. Yeah, it's part of the... Uh, I mean, you know, it's software, so marginal cost is zero, and like, okay, just like, uh, just do other, like, uh, build for the people who are paying, not build, don't build for people that won't pay anyway. They go to another app.

   12. HSHarry Stebbings22:37

       What's the number one reason why people churn, stay?

   13. MRMatthieu Rouif22:39

       Well, people say is they don't, like, uh, need it anymore, moving on, and I think, uh, yeah, moving onto another app or another need.

   14. HSHarry Stebbings22:46

       When, when you... Uh, and maybe I'm not allowed to say this, uh, what's your yearly churn?

   15. MRMatthieu Rouif22:51

       Yeah, I think, uh, well, I won't give you the exact number, but, uh, and that's the thing I would love to know from all competition, so I think it's the-

   16. HSHarry Stebbings22:58

       (laughs)

   17. MRMatthieu Rouif22:58

       ... if there is one number-

   18. HSHarry Stebbings22:58

       Is that the Holy Grail number, do you think?

   19. MRMatthieu Rouif23:00

       Yeah, I think it's the one that you, you'd love to know, yeah.

   20. HSHarry Stebbings23:03

       If I'm just totally

6. 23:04 – 26:23

   Marketing and Collaboration

   1. HSHarry Stebbings23:04

      honest, I'm generally more of an enterprise investor.

   2. MRMatthieu Rouif23:07

      Yeah.

   3. HSHarry Stebbings23:07

      And when I look at consumer subscription, I've had this out with Nico and Jason, and I do, when they're churning 30, 35%, I'm not saying this is you, but just consumer subscription, 25 to 40% of their customers every year, how do we make that business work?

   4. MRMatthieu Rouif23:21

      Yeah, the dynamic is, I, for us, it's really focusing off people who are deeply engaged and deep focused. I think you need to live with the idea of, like, mobile software is, like, 10X bigger, bigger than anything you'll do on desktop anyway. So you are like, we're addressing five billion people. Like, uh, I mean, my kids, the first app they use is photography. They use PhotoRoom, you know? It's like one of the first software you use in your life is photo editing, and probably the last one you'll use, too. And if you want to, like, be the number one, though, you have to embrace that. So I mean, you're addressing five billion people. It's much bigger than anyone else, any, uh, for sure any SaaS business. While people will test the app, will try it out, then you want to focus on the one that matters most for you. And so that's, that's like, get the question, get the usage, get the analytics to understand, okay, this one is one we really like, and let's focus, and let's make a, m- make it, like, marvelous for them. Let's delight them. But it's, really, the top of funnel is huge, and you shouldn't, like, uh, you should embrace that for our mobile subscription.

   5. HSHarry Stebbings24:17

      I'm just going for this 'cause I am too intrigued. You know, I see, obviously we use all the different tools. You know, we use Canva for certain things, I think thumbnails. We, we use you for a lot of our visuals on the shows themselves in terms of the album artworks and, like, headshots in particular and removing backgrounds. Everyone's kind of coming into each other's space. Do you know what I mean?

   6. MRMatthieu Rouif24:34

      Yeah.

   7. HSHarry Stebbings24:34

      Like, suddenly you've got, uh, you know, Canva moving into other people's space, Adobe moving into other people's space, you moving up-And I'm looking at it going, "I don't know how this plays out," because everyone's just trying to eat all of the pie. How do you think it plays out when you look at your PhotoRoom, your Canva, your Adobe, your Mojo, your f- e- what happens?

   8. MRMatthieu Rouif24:55

      We are like a very fast growth track. Uh, we, the opportunity, I think is huge, as I told you, like a 5 billion people. What we really try for is making photo, like studio-quality photo accessible to like anyone, like any professional, any entrepreneur in the world. And I think for that, we focus on like a different use case than like Canva, who's more, which is more for design on your desktop, or Adobe, which is for the experts. Like Adobe is for the tens of millions of people that are spending the day in front of their computer and they're, like they're experts. They, they know their job. They make money from that. We are providing the service for people that can't afford that, so we're making it more accessible. It's 10X more people because they're on their phone and it's a wider audience. But I actually don't think it's the same product that you can develop. You need to like choose the one and we'll all make like, uh, more than a billion in revenue. I mean, they're, Adobe's already doing it and, uh, and Canva close to that.

   9. HSHarry Stebbings25:54

      Canva's well over.

   10. MRMatthieu Rouif25:56

       Yeah. So Canva is well over. Well, we're on the same track and we'll, we'll be doing one billion, uh, for our difference audience.

   11. HSHarry Stebbings26:01

       So now is the time to invest in PhotoRoom. (laughs)

   12. MRMatthieu Rouif26:04

       (laughs) Always.

   13. HSHarry Stebbings26:06

       Uh, no, I, I... Do you need to move into enterprise?

   14. MRMatthieu Rouif26:09

       Well, we already-

   15. HSHarry Stebbings26:10

       And do you need to move into desktop?

   16. MRMatthieu Rouif26:11

       Our customers are like, uh, small businesses or B2B. So we help them make more money and that's when, when they pay. So this is, this is our audience today. Then enterprise, we're already like, that was our,

7. 26:23 – 27:28

   Company History and Evolution

   1. MRMatthieu Rouif26:23

      our, we started with the PhotoRoom API. So we have like iOS, Android, web API. We can render the same thing, which is quite unique. And we were very successful with the API. There was this sense of strong pull, and so last, last May, you get the Barbie movie, um-

   2. HSHarry Stebbings26:39

      Yeah. Yeah.

   3. MRMatthieu Rouif26:40

      And they, they-

   4. HSHarry Stebbings26:41

      Love a bit of Margot Robbie. Come on.

   5. MRMatthieu Rouif26:42

      Yeah. (laughs) Exactly.

   6. HSHarry Stebbings26:43

      (laughs)

   7. MRMatthieu Rouif26:43

      And they did like, a big part of their marketing was, uh, using PhotoRoom to create like a Barbie poster for anyone in their, in their, in their audience. So the, they used our tech, which was a partnership, and anyone, like not a pro, could create pro-quality posters. Uh, and I mean, the Kardashian, Rihanna, they use that, that tens of millions of users. And that's like the, the API is taking off with that. And that's one example. We also have the Wolt team, like for food delivery, and they just, same thing. Like, they make a crowd, a community, like create studio-quality photos or posters, look professional, uh, for the restaurant and the people sell more. That's what we've been doing for the four, like for the past year. We're just delivering to more people with the enterprise part and the API.

   8. HSHarry Stebbings27:24

      I totally get you. Can I ask, what worries you most when you look at the future of the space?

8. 27:28 – 44:40

   Tech Aspects

   1. HSHarry Stebbings27:28

      What, what concerns you?

   2. MRMatthieu Rouif27:30

      I think, as you say, like the field is moving, uh, very fast and AI is making a lot of product that kind of obsolete. So you have to think of like, to make sure you're building like an old product with new tech. I think that's a very important part. To give you an example, the first company I made, I was trying to make like postcards, so, and print them from my smartphone. And, well, looking back, the obvious answer is like, okay, that's not what you want to do. You want, with the new smartphone, you want to create Instagram. Like, you want to share an image of where you are and share it with your friends. That's like the new product with the new tech, and I think it's very important for PhotoRoom, like when the tech is moving that fast to, okay, what's the new way of doing that? Not like the old way with this tech. And so you need to... yeah. Just try your product all the time.

   3. HSHarry Stebbings28:15

      Do you think founders today are using new tech, being AI, to solve old problem?

   4. MRMatthieu Rouif28:22

      Well, I don't think like doing that exactly works. I mean, I see, especially for new founders work at all. I think what's happening with AI is you have like old past products that are building tech to serve the, their existing customers. So if you take an example, like this is the idea of the, the copilot, right? I mean, if you're an incumbent, you're, you're a car maker, you're going to build like the navigation bar, you're going to build like a, some security features. But it's just on top of what's already existing. If you're the n- the, the newcomer, if you're the founder, you're building the Tesla, you're building the, the autopilot part where the input is like, "I want to go to this place. I want it to be like s- uh, a scenic drive." And boom. Yeah. It gets it done.

   5. HSHarry Stebbings29:04

      I do want to dive into kind of, uh, the, the, the depths of AI, 'cause I think it's important. If we just start from the top, the one thing that I'm always questioning is like, what's more important? Is it model size or is it data size?

   6. MRMatthieu Rouif29:19

      That's a question that comes up often. (laughs)

   7. HSHarry Stebbings29:20

      (laughs)

   8. MRMatthieu Rouif29:20

      It's a great question. Um, I think on data what matters is quality more than size. And on, on the model size, it's a trade-off, so it depends on what you want to do. Like bigger is like higher quality, but it's also a lot slower. And what PhotoRoom does is like being 10X faster than everything on the market, because we are focusing on one use case. So you can take smaller model because you have like a specific, uh, use case and that's very... that, that, that's key. So it's kind of a product trade-off when you talk to your customer. And again, that's one thing we do is, we talk a lot to the users and understand what are the trade-off they want to have with the AI part.

   9. HSHarry Stebbings30:00

      Can I ask you, when you look at, you know, what you've done with your own models, given the size of your team, is that worrying for the future of AI in terms of commoditization?

   10. MRMatthieu Rouif30:09

       I think who benefits the most from, like so first, like the leader in the space, like own the full stack. So you, you look at ChatGPT, they do like the product and the AI part. I do think you need to own the full stack if you want to deliver high-quality product. The tech informs the product and the product informs the tech, and you build this like feedback loop. What's the... yeah, what is worrying for the commoditization? I don't think so, because what's important for PhotoRoom is the AI part is in the, our DNA. Like Elliot, my co-founder is like, he wrote the book on computer vision, you know? So, and I, I, I also trained some models, like before I've been u- working on AI for the past 10 years. And any commoditization make us faster and benefits from the people knowing AI actually.

   11. HSHarry Stebbings30:51

       Do you think the foundational models will be commoditized though? Like would you be a buyer of OpenAI?

   12. MRMatthieu Rouif30:56

       For what we're not...... sp- specializing, like, techs. We- we- we- yeah, we're built on top of- I mean, that's what we do all the time. We start from, like, something that's open source, commoditize to understand the product value and- but then you need to- if you don't want to be a- a- a- if you want to build a mode, you have to understand what, uh, to train and iterate for your own model also. I do think commoditization brings value to the innovation for, like, open source, but then the best- the best player will be able to, like, retrain something on top of it and start to really commoditize it. There is value in having the tech and understanding of the training in that side.

   13. HSHarry Stebbings31:29

       I- I always think, you know, when we- when we talk about kind of data size and model size, the amount of data required will bluntly go down so significantly in terms of what it takes to train models.

   14. MRMatthieu Rouif31:39

       Yeah.

   15. HSHarry Stebbings31:39

       Uh, at some point there's, like, an asymptote. When is that? When does it reach, like, minimal requirement?

   16. MRMatthieu Rouif31:45

       Yeah, I think it's- you still need like a- I mean, from text and photo, you still like mil- you need millions- billions of- of data points to-

   17. HSHarry Stebbings31:53

       You need billions of data points though.

   18. MRMatthieu Rouif31:54

       So, yeah, for- for text for instance, yeah. Yeah, you still need millions. It's not a- a- e- and- and more data for a bigger model would be valuable, so it depends on the size of the model you want to build.

   19. HSHarry Stebbings32:05

       W- who do you think benefits more today? Is it incumbents or is it startups?

   20. MRMatthieu Rouif32:11

       Yeah, I think both benefits from it, like, it's a reshuffling. But to be honest one of the reason I- I mean, I told you the Inception story, but another part of it is, like, I had been working on AI, so we were the first to ship, like, a Core ML- before Core ML exist was the iPhone framework, an a- an app with AI to do video editing at GoPro. One of the frustration for me is like, you- it's very difficult when you have an existing audience and an existing- yeah, an existing user base, an existing product to just kill it or destroy it and you- and like build something new. So I think long term, the most valuable, uh, like who benefits most is- are the entrepreneurs, and what I'm like paranoiac about is more like what is this new team of, uh, well, Matt and Elliot are going to build, like, in, uh, in (laughs) in 2023 that is going to be something we haven't seen in the space?

   21. HSHarry Stebbings33:00

       How do you feel about the co-pilot strategy? I had someone on the show say, "It's the last dying breath of incumbents," which I quite liked. (laughs)

   22. MRMatthieu Rouif33:08

       That's, uh, quite- yeah, it's- I'm quite aligned with that. It's quite, uh, brutal for them, and I'm sure some will survive, but, uh, I think the problem is- where I see that being very true is if you have an audience today, like you have programmers, you have designer, well, you want to- you don't want to alienate them. You want to give them extra value, so you're kind of thinking, "What can I build for them that makes their life easier?" But you're not want to like have something that's kind of an autopilot to replace them. That's why I take the, like- yeah, the Tesla analogy, like, if you're making planes, like, you bring a co-pilot technology, but who's buying the planes? The airline and the pilots, and you're not going to, like, sell an airplane with no- no pilot at once. They're going to like, uh, like s- go on strike and everything. So I think the autopilot-

   23. HSHarry Stebbings33:55

       So how do you do it transitionally? 'Cause you can't say, "Hey, we're gonna replace you." Ha ha.

   24. MRMatthieu Rouif34:00

       Yeah. No, that's why I agree with your quote. Like, it's very difficult for the incumbent to say like, "Okay, we're going to, like, kill the product you've been using, make it totally different, and make you useless." So that's very difficult, where I think what's very interesting for the autopilot analogy is you address people that couldn't afford that before. That's what Photoroom is doing. When you're- you have a small business, you can't afford, like, uh, a freelancer to- to help you. You don't have the skills. You don't have the time. If you take the co-pilot analogy, you don't- yeah, if you take the co-pilot analogy, you don't, uh, have the time to learn to drive because they have- the co-pilot just tells you where to go but you still need a driver, right? And so you spend like ten thousands of hou- tens of thousands of hours learning to drive and then you're good. Well, for design, people don't have tens of thousands of hours when they're starting a restaurant. They should be cooking, you- you know? So what we give them is more like a- an autopilot where they- they come up with like their restaurant, where it is, and we just, like, serve that to them. Like, we serve the visual. We- we automate that part.

   25. HSHarry Stebbings34:54

       What do you think are the biggest misconceptions people have around AI? I spent a lot of time obviously with Yann LeCun, who's, I think an angel in the company, no?

   26. MRMatthieu Rouif35:01

       Yeah, yeah.

   27. HSHarry Stebbings35:01

       Yeah.

   28. MRMatthieu Rouif35:02

       Yann is, uh- yeah.

   29. HSHarry Stebbings35:03

       Uh, what do you think are the biggest misconceptions that people have?

   30. MRMatthieu Rouif35:06

       It's only the b- the beginning. Like, product- I mean, so not optimized. Like, there's so much thing people are going to build on top of what's happening right now. So just one person don't like- it's opening so much thing you can build on top of. Like, it's easier to build new ways- to build new way to c- consume content. So that's like- people that kind of judge like, "This is not quality- high quality enough," like, people have spent like a few months on that. Photoroom is three years old, so you know, it's, uh- it's only the beginning. A more, like, practical thing, uh, I think is a second misconcep- misconception is people don't like to write prompts. Like, it's kind of a command line interface, and for other things it doesn't make sense to, like, uh, to input text, I would say.
9. 44:40 – 45:44

   Geographical Influence in Tech

   1. MRMatthieu Rouif44:40

      You, you have to organize. That's the, I mean, that's the put yourself out of job, structure the team, that's the founder's jobs and it's always challenging, but it's really exciting and cool.

   2. HSHarry Stebbings44:49

      I, I spoke to Yann LeCun before the show and he- ... change

10. 45:44 – 46:57

    Personal Reflections

    1. HSHarry Stebbings45:50

       in life. Um, if you could call yourself up the night before your first, you have three now, and say, "You know what, Matt? You shouldn't do this." What would you tell yourself?

    2. MRMatthieu Rouif46:01

       I think it's very difficult to know what it is (laughs) beforehand. Uh, and, uh, you have a lot of principle before the kids. You, first you have principal and then you have kids, I guess. (laughs) And there are other things you want to like, uh, y- there are other things you'd like to do, but you don't have time to. But it's the m- it's an amazing, yeah, it's an amazing experience.

    3. HSHarry Stebbings46:18

       Do kids make you a better leader?

    4. MRMatthieu Rouif46:20

       You have to think how you, you can like, uh, make them grow. You have to like, and really be an example for them. So, and I, I believe strongly that the best way to lead is like, uh, showing a strong example of the way you should do it. Like hardworking, uh, transparent about you do, like being an example. And I think that's the best way to lead and teach.

    5. HSHarry Stebbings46:39

       Do you believe in balance?

    6. MRMatthieu Rouif46:40

       Not too much. I think I, I like to do things 100%. Uh, but I do have like the kids and I see them, but, uh, there is some balance to find in that.

    7. HSHarry Stebbings46:48

       Is that tough?

    8. MRMatthieu Rouif46:49

       Yeah. It's, it's tough on that part.

    9. HSHarry Stebbings46:50

       Do you see the kids much?

    10. MRMatthieu Rouif46:52

        Yeah. I s- I spend a lot of time with them.

    11. HSHarry Stebbings46:53

        (laughs)

    12. MRMatthieu Rouif46:56

        Yeah, I do. No, no, it's amazing.

11. 46:57 – 53:34

    Quick-Fire Round

    1. MRMatthieu Rouif46:57

    2. HSHarry Stebbings46:57

       Your, your wife's gonna be listening to this. Like you could spend more-

    3. MRMatthieu Rouif46:59

       No, she's going to say not enough.

    4. HSHarry Stebbings47:00

       Oh, yeah. (laughs)

    5. MRMatthieu Rouif47:00

       She's going to say not enough for sure.

    6. HSHarry Stebbings47:02

       There's always more time. (laughs)

    7. MRMatthieu Rouif47:03

       Yeah, exactly. (laughs)

    8. HSHarry Stebbings47:04

       Uh, okay, we are gonna do a quick fire. So I say a short statement, you gimme your immediate thoughts. Does that sound okay?

    9. MRMatthieu Rouif47:09

       Yeah.

    10. HSHarry Stebbings47:09

        So what do others not know that you know to be true?

    11. MRMatthieu Rouif47:13

        Uh, people don't like to write prompts. I (laughs) would say that, uh, that's a funny one.

    12. HSHarry Stebbings47:17

        Will prompts be gone in five years?

    13. MRMatthieu Rouif47:19

        No, no, I think it makes sense. There's still the command line interface that I think it will still be there, but it's kind of for, for the expert.

    14. HSHarry Stebbings47:25

        OpenAI, long or short?

    15. MRMatthieu Rouif47:27

        I mean, I'm long on the, on the... Team is sharp. They have a, like a brand now and yeah, Sam is super sharp, so I'm long on them.

    16. HSHarry Stebbings47:35

        What's the biggest misconception, like the single biggest on AI? And you're like, "Oh, for fuck's sake, why am I saying this again?"

    17. MRMatthieu Rouif47:42

        Yeah. (laughs) Again, like prompts. No, I'm going to say, say something else. People kind of judge the result, but it's moving so fast. It's like people don't understand how, like a five people team came up with an algorithm or like a ten people team. And so like now there is optimization, there's project building. So it's really, it's just the beginning of building super useful exceptional, uh, product on top of it.

    18. HSHarry Stebbings48:03

        You can have dinner with anyone in the world dead or alive. Who do you have dinner with?

    19. MRMatthieu Rouif48:08

        I love like visual arts and science and tech. So, well, Steve Jobs is maybe a cliche. Walt Disney maybe.

    20. HSHarry Stebbings48:14

        That, I think that's a good one. Which brand do you most respect and why? So like mine is like Chanel, like Paris, you have mothers that loves them, and China, you have teenagers that loves them. America-

    21. MRMatthieu Rouif48:26

        I was gonna say Nike. Nike.

    22. HSHarry Stebbings48:28

        Why?

    23. MRMatthieu Rouif48:29

        In the sense that it enables people, like this idea of pushing people to be like, to do more, like just, just do it entrepreneurs and I ki- I kind of love, I love that part.

    24. HSHarry Stebbings48:38

        What's the strongest belief you had which turned out to be wrong?

    25. MRMatthieu Rouif48:42

        I had a very strong belief that you can only innovate in and be creative in person. Well, we started PhotoMove earlier, then COVID hit and we just like, "Okay, it's time to build a remote company and, and be hybrid." And while we're thriving, we are very international. So it really changed my mind on that.

    26. HSHarry Stebbings49:01

        So now you are hybrid?

    27. MRMatthieu Rouif49:03

        Yeah. We meet once a month in Paris. Like we have a beautiful HQ, but the team is all over Europe and that brings like so much diversity to the team and to the product we build that, and it's such a pleasure to work with like different nationalities from all over the world.

    28. HSHarry Stebbings49:16

        Are you in the office every day?

    29. MRMatthieu Rouif49:17

        (laughs) Yeah, I am. I am.

    30. HSHarry Stebbings49:20

        But the team don't need to be.

Episode duration: 53:34